Essay about Best Buy Business Strategy

Words: 5329
Pages: 22

Assignment: Best Buy Business Strategy

Introduction and Background
Overview of Company Best Buy stores offer a wide variety of consumer electronics, home office products, entertainment products, appliances and related services. These include, Best Buy Mobile which offers a wide selection of mobile phones, accessories and related services. Geek Squad provides residential and commercial computer repair, support and installation services. Magnolia Audio Video Stores offer high-end audio, video products and related services. Naspstar is an online provider of digital music. Pacific stores offer high end home improvement products including appliances, consumer electronics and related services.
Best Buy International segment is located
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Competition is high in this industry primarily because there is little to no switching cost if a buyer chooses to shop elsewhere. Furthermore, the products are not differentiated since buyers can purchase similar products at almost all of the different electronic stores. As a result, companies compete on prices and non-tangibles such as customer services and goodwill.
Threat of New Entrant
The threat of potential new entrants into the consumer electronics retail industry is relatively low. As a consequence, the potential threat of new entrants has been up (Larson, 2008). The low market capitalization implies that it would not be difficult to enter the industry based solely on capital required. However, a potential entrant would have to overcome the superior brand reputation that Best Buy has established.
Best Buy has built a reputation for selling mid-to high-end product and excellent customer services. Therefore, it would be difficult for a new entrant to challenge customer services. Further more, it would be difficult to under cut incumbent firms who have already established relationships with suppliers to purchase merchandise at the lower prices. Although threat to entry is considered to be low, the potential pool of entrant is actually very large as it consists of numerous online electronic retailers.
Bargaining Power of Buyers
The bargaining power of buyers